Edited version of private advice

Authorisation Number: 1052161894775

Date of advice: 29 August 2023

Ruling

Subject: CGT - small business concessions

Question

Will the Commissioner exercise his discretion under subsection 152-80(3) of the Income tax Assessment Act 1997 (ITAA 1997) to grant an extension of the two-year period to 30 June 20XX to allow the small business 15 year exemption to be applied on the sale of the property?

Answer

Yes. Had the deceased disposed of the property prior to their death, they would have had access to the small business 15 year exemption in relation to the property.

Having considered your circumstances, the Commissioner will exercise discretion under subsection 152-80(3) of the ITAA 1997 and extend the two-year period to 30 June 20XX?

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

DDMMYYYY

Relevant facts and circumstances

The taxpayers were gifted a family held property.

The taxpayers owned the property as joint tenants and used the land to conduct a primary production business.

Upon the deceased death, the surviving tenant acquired interest in the property and continued to operate the primary production business as a sole trader until the property was sold in June 20XX.

The deceased was over 55 years old at the time of their death and would have been entitled to claim the small business 15-year exemption just prior to their death. The basic conditions would have been satisfied to be eligible to apply the CGT small business concessions.

The taxpayer is also entitled to claim the small business 15-year exemption on their share of the gain on the sale of the property and has satisfied the basic conditions.

The property was sold at auction on DD MM 20XX exceeding the 2 year period to access the small business 15-year capital gains tax exemption on the acquired share of the property.

The sale of the property was delayed due the following factors:

1)    The region where the property is located was placed under heavy lockdown restriction by government authority from March 20XX due to COVID- 19. The real estate market was affected as there were a number of restrictions in place for auctions and open home inspections. These restrictions commenced only 4 months after the deceased's death and were only lifted on DDMMYYYY.

2)    The entire region where the property is located was fully drought declared at the time of the deceased death and for years after, the business and the property were impacted by severe drought.

3)    The region where the property was located was impacted by bush fires.

4)    Due to the taxpayers age they required assistance from friends and family to prepare the property for sale.

The property was listed as soon as practically possible after none of the above circumstances were an impediment, and the sale was actively managed to completion. The property as settled on DD MM 20XX within 12 months of being listed for sale.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 152-80

Income Tax Assessment Act 1997 section 152-80(3)

Income Tax Assessment Act 1997 section 152-105